Western Economic Diversification Canada
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Executive Summary

The Government of Canada (GoC) established the Department of Western Economic Diversification Canada (WD) in 1987 as the federal regional economic department for western Canada. WD’s corporate headquarters is located in Edmonton, with some corporate functions located in Ottawa. Regional offices are located in Vancouver, Edmonton, Saskatoon and Winnipeg. WD has approximately 400 employees.

Information Management and Technology (IMT) is a key enabler for WD, as all staff deal with information and/or technology on a daily basis. IMT is largely managed by the IMT Directorate at WD headquarters as the Directorate is responsible for both technical infrastructure and information management (IM), and has a total complement of approximately 24 staff led by the Director, IMT and Chief Information Officer (CIO). In addition to IMT Directorate staff, there are 14 regional IMT staff that report to regional management (the regional Manager of Finance) and have a functional reporting relationship to the CIO (although no direct reporting relationship).

IMT governance processes at WD are intended to provide the structure that links IMT processes, IMT resources, and IMT information to WD’s objectives and strategies. IMT governance processes are engaged in by management of the IMT Directorate through day-to-day job performance and participation on relevant committees, and by senior management of the department through membership on relevant IMT governance committees.

There are two governance committees that share the main responsibilities over IMT oversight within the department:

  • IMT Council: a cross-representation of departmental business areas and regions with vested interest in the major initiatives and client relationships undertaken by the IMT directorate. The IMT Council is responsible for assessing business cases for major initiatives, setting priorities and making recommendations to Executive Committee for unallocated funding requirements in partnership with the respective Business Project Sponsor.1
     
  • Executive Committee: the departmental standing committee responsible for: providing overall strategic and management oversight to all departmental activities; ensuring that the long-term strategic outcomes of the department and regions are achieved; and, setting priorities for the department to achieve these outcomes.2

The objective of the audit is to determine whether WD has in place an effective IMT governance framework and practices that meet GoC and WD policy requirements.

Key Findings

Findings should be viewed through the context of current IMT -related developments, both within WD and the broader federal government environment that may have a significant impact on WD’s IMT Governance and the audit’s findings and recommendations.  Specifically, this includes:

  • The current fiscal environment, including the Federal Government’s Strategic and Operating Review, means that the availability of WD IMT resources may be constrained.
     
  • The Government of Canada (GoC), through the new Shared Services Canada entity is intending to streamline and consolidate federal government IT infrastructure and operations, particularly email, data centres and networks, and which may limit WD’s ability to directly control IMT resources.

Strengths

Throughout the audit fieldwork, the audit team observed examples of how controls are properly designed and being applied effectively, including those listed below:

  • WD has recently improved processes over IMT governance significantly, including; revising the IMT Council’s Terms of Reference to provide clarification of the IMT Council’s mandate, and instituting quarterly reporting from the IMT Council to the Executive Committee.
     
  • Adequate controls exist over IMT budgeting. The IMT Budget is prepared annually by the CIO / Director of IMT and approved by the Executive Director Finance and Corporate Management. On a monthly basis, the CIO prepares a detailed variance analysis of forecasted budget versus spent / committed budget.
     
  • Staff and management of the department have expressed that they are satisfied with the level of IMT service desk support provided by IMT staff.

Observations

The audit team also identified areas where management practices and processes can be improved. The following are observations made by the audit team that highlight areas of improvement that should be addressed by WD.

  1. There are no formal processes to ensure that IMT planning is fully integrated with the department’s planning processes, and IMT planning is currently performed with limited input from stakeholders across WD (i.e. regional stakeholders, senior management, Planning and Reporting Committee). IMT capacity and capabilities have not been formally assessed to determine if they are appropriate to achieve the IMT priorities of the department. Furthermore, IMT risk management is performed informally at WD, as an IMT risk assessment framework is not in place, and, for example, a risk assessment is not formally performed as part of annual IMT planning.
     
  2. Formal performance measures for IMT have not been defined. Some informal monitoring of IMT performance with regards to IMT projects and ongoing operations has been performed within the IMT Directorate; however, there has been limited monitoring / reporting on IMT performance to governance committees.
     
  3. Processes over prioritizing IMT projects are maturing as the IMT Project Priority Setting Framework has recently been established; however, evidence of justification of IMT project rankings is not retained, and cost analysis performed as part of prioritization processes does not consistently include all costs associated with IMT projects.
     
  4. While WD has a limited number of large projects, oversight processes over IMT projects are not currently formalized at WD. Some oversight of IMT projects has been performed by IMT Council and the Executive Committee; however clarity could be improved over the Committees’ oversight expectations for large, medium or small projects. In addition, change management processes have not been formally defined to provide clear guidance on ensuring significant changes go through appropriate project oversight processes.

Recommendations

  1. A formal IMT planning process should be established that allows for integration with departmental planning. Furthermore, planning processes should engage all relevant stakeholders (including regional IMT contacts, senior departmental management, and the Planning and Reporting Committee), and should be periodically monitored by management.
     
  2. An IMT risk management framework should be developed that allows WD to identify strategic and operational risks related to IMT , develop mitigation strategies/controls for identified risks, and regularly report on the status of mitigation measures. Furthermore, IMT management should be formally engaged in the departmental planning process to help ensure that IMT risks are considered as part of departmental planning, and that the IMT Directorate is aware of risks at the departmental level that are relevant to IMT activities.
     
  3. Formal performance measures should be established for all key IMT activities, including: operational service delivery, key IMT projects, and priorities identified within the IMT annual plan. IMT performance reporting processes should be established that define IMT performance reporting to IMT management and relevant committees at scheduled periodic intervals.
     
  4. Some level of justification of IMT project rankings should be provided to the Executive Committee to facilitate the effective oversight and approval of IMT resource allocation decisions.
     
  5. Projects costs that are used to perform cost-benefit analysis and produce IMT project rankings should consistently include all relevant costs, including: full time employee labour (at headquarters and regional locations), and post development maintenance costs.
     
  6. A formal IMT project oversight framework should be established that helps ensure that adequate oversight is performed consistently for IMT projects. The framework should provide guidance on ongoing monitoring of the performance of IMT projects with regards to cost, quality and schedule and be supported by a documented change management process. Furthermore the framework should clarify the reporting requirements to each governance committee depending on the importance of a project (i.e. large, medium, low value/risk).

Statement of Assurance

In my professional judgment as Chief Audit and Evaluation Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support the accuracy of the conclusion provided and contained in this report on the effectiveness of WD’s IMT governance framework and practices.

The assurance is based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed upon with management. The assurance is applicable to the policies and processes examined. The evidence was gathered in compliance with Treasury Board policy, directives, and standards on internal audit for the Government of Canada. The evidence has been gathered to be sufficient to provide senior management with the proof of the conclusions derived from the audit.

Conclusion

In conclusion, the IMT governance framework and practices to manage IMT in accordance with relevant acts TBS and Departmental policies, procedures and practices, has control weaknesses with moderate risk exposures that require management attention, related to strategic planning; risk management; performance measurement; project priority setting processes; and, project oversight processes.

Donald MacDonald

Chief Audit Executive
Department of Western Economic Diversification

Audit Team Members

John Hagan
With the assistance of external resources

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1 WD IMT Council Terms of Reference
2 WD Executive Committee Terms of Reference